ACC 304 Course Great Wisdom / tutorialrank.com ACC 304 Course Great Wisdom / tutorialrank.com | Page 354

44.

The cumulative feature of preferred stock

a. limits the amount of cumulative dividends to the par value of
the preferred stock.

b. requires that dividends not paid in any year must be made up
in a later year before dividends are distributed to common
shareholders.

c. means that the shareholder can accumulate preferred stock
until it is equal to the par value of common stock at which time
it can be converted into common stock.